Management Consultant

A business strategist and economist with more than 25 years experience in management consulting, business and government. Specialties include Retail Lifecycle Management, supply chain strategy and operations, and business transformation.

Monday, August 3, 2009

With the final markups of the Affordable Health Choices Act now clearing committees in the U.S. House of Representatives, the potential scope of the legislation is becoming clear. And, while the American Medical Association is on board with H.R. 3200, the House version of the bill, the insurance industry is coming out swinging.

Doctors have to appreciate several aspects of the bill. First, the bill would extend insurance coverage to tens of millions of Americans who currently are denied coverage by insurance companies or who simply can not afford it. (See An Explanation of the Health Care Bill.) Second, the bill enhances the role of the primary care physician in determining the effective course of treatment and offers economic incentives for doctors and medical students to take on this role. The bill also addresses flaws in the Medicare reimbursement mechanism and includes measures to promote wellness and disease prevention.

Insurance companies seem most concerned about the introduction of a government-operated insurance plan, which they view as unfair competition. Health care economists argue that a government plan is required in order to:

Ensure access to affordable care

Provide market leadership in setting standards and negotiating prices for medical services, which currently vary widely by market

The legislative history of the bill, a work in process, demonstrates considerable cooperation between and within the Congressional chambers. The Senate had split the bill into two components. Sections of the bill relating to reform of insurance and other mechanisms for funding health care were drafted by the Senate Committee on Health, Education, Labor and Pensions (H.E.L.P.). That Committee completed its work on the bill on July 15, 2009 and submitted it to the full Senate for consideration after the August recess. The Senate Finance Committee, which took responsibility for drafting legislation governing the cost of health care, has not completed its work.

In the meantime, the U.S. House divided its work among three committees, all of which have completed markup of H.R. 3200. That version of the bill closely mirrors provisions of the bill passed by the Senate H.E.L.P. Committee, but also covers areas still under debate in the Senate Finance Committee. Having effectively taken the lead in the legislation, the House of Representatives is expected to pass H.R. 3200 following the August recess, perhaps with amendments taken from the floor of the House, and submit it to the Senate. At that point the Senate may choose to accept it as it stands (which is unlikely) or continue work on its own version of the legislation. If the Senate passes a bill that differs from H.R. 3200, the House and Senate leadership would then create a Conference Committee made up of representatives from each chamber to negotiate a bill that would be acceptable to both the Senate and the House of Representatives.

Important provisions of H.R.3200 that have not been cleared by a Senate Committee would empower the government plan to aggressively negotiate prices, delivery methods and standards of service with providers. The debate about the government's role in determining what kind of care is most efficient and effective is bound to be most contentious.

Expecting a fight in the Senate, the Administration has already begun to telegraph its fallback position by referring to the bill as "insurance reform." In other words, having gotten similar insurance reform provisions through committees in both the Senate and the House, the Administration is confident that at least those aspects of the bill will become law. And, while they would like to adopt stronger measures to accelerate cost containment, those more controversial measures could be sacrificed in the interests of getting insurance industry restructuring underway.

Businesses large and small should be prepared to reevaluate their health care policies, providers and pension plans in light of this new legislation. Economic effects are likely to be profound.

Thanks for the comment. How many individuals over 50 is the insurance industry refusing to insure? Regulated industries get into trouble when they fail to provide services. See "common carrier obligation."

Excellent reports on the state of health care reform. HR3200 has a lot of excellent provisions that are being mis-characterized by consevative think tanks who are feeding their opinions to Republican Congressmen. One key issue seems to be what exactly they have in mind for the Medicare Advantage programs of which I am a participate (Kaiser Senior Advantage). I think Kaiser is an example of a fairly well run HMO, although some people don't care for their lack of a hand holding culture. But they do provide a lot of support for wellness programs. if you have any thoughts on that I would be interested in hearing them. I am starting to get confused myself on the myriad of proposals coming out of the Congress and I hope this doesn't kill health care reform which is badly needed for the health of our country and ourselves.